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35% of American Adults Have Debt 'In Collections'
New submitter meeotch writes: According to a new study by the Urban Institute, 35% of U.S. adults with a credit history (91% of the adult population of the U.S.) have debt "in collections" — a status generally not acquired until payments are at least 180 days past due. Debt problems seem to be worse in the South, with states hovering in the 40%+ range, while the Northeast has it better, at less than 30%. The study's authors claim their findings actually underrepresent low-income consumers, because "adults without a credit file are more likely to be financially disadvantaged."
Oddly, only 5% of adults have debt 30-180 days past due. This latter fact is partially accounted for by the fact that a broader range of debt can enter "in collections" status than "past due" status (e.g. parking tickets)... But also perhaps demonstrates that as one falls far enough along the debt spiral, escape becomes impossible. Particularly in the case of high-interest debt such as credit cards — the issuers of which cluster in states such as South Dakota, following a 1978 Supreme Court ruling that found that states' usury laws did not apply to banks headquartered in other states.
Even taking into account the folks who lost a parking ticket under their passenger seat, 35% is a pretty shocking number. Anyone have other theories why this number is so much higher than the 5% of people who are just "late"? How about some napkin math on the debt spiral?
Oddly, only 5% of adults have debt 30-180 days past due. This latter fact is partially accounted for by the fact that a broader range of debt can enter "in collections" status than "past due" status (e.g. parking tickets)... But also perhaps demonstrates that as one falls far enough along the debt spiral, escape becomes impossible. Particularly in the case of high-interest debt such as credit cards — the issuers of which cluster in states such as South Dakota, following a 1978 Supreme Court ruling that found that states' usury laws did not apply to banks headquartered in other states.
Even taking into account the folks who lost a parking ticket under their passenger seat, 35% is a pretty shocking number. Anyone have other theories why this number is so much higher than the 5% of people who are just "late"? How about some napkin math on the debt spiral?
is a pyramid scheme.
One reason that I'm sure is a factor in the difference, is that companies are less inclined to bother reporting the "past due" status. It's overhead for them to do it, and there's not really any benefit, but when someone hits the collections threshold, they'll go ahead and take the time to report it.
Given the trend of income inequality it would be no surprise of any sort of abrupt riots to the magnitudes of some civil rights leader got killed
Once you have something go into collections it is always there until you pay it. (medical bills/school debt probably drives a lot of this)
You're only 30-90 days lat for a short period.
"Many consumers were burned for relatively small amounts -- about 10 percent of the debts were smaller than $125, Ratcliffe says"
This kind of thing probably drives the numbers way up too. That late fee from blockbuster, etc.
The whole point of a "credit score" is horribly broken. In order to get approved for debt, you must have debt. If you have money in the bank and no monthly debt payments you have a reduced score. It's a SCAM! A scheme to make sure that you are constantly in debt, and yet it's perfectly legal. Living in debt constantly costs you money, and for what? So that you can have more debt? Wow!
The fact that people don't get this, or simply don't care, is very telling.
Personally I have almost no debt, just my car payment. I don't have a lot of debt so have a laughably low credit score. If I don't have cash I can wait to buy something. Actually since I manage my personal finances very well purchasing something I want is never an issue.
-The wise argue that there are few absolutes, the fool argues that there are no probabilities.
The Middle Class didn't.
The Poor got taken to the cleaners.
Thank god my investments in Guillotine and Pitchfork franchises are proving to be fruitful.
-- Tigger warning: This post may contain tiggers! --
The simple fact of the matter is, if you are in collections, most companies get the ability to rape you. They will be as harsh as possible when talking to you so that you don't want to negotiate. This equals more money in interest.
Student loans threatened me into work I couldn't physically do, and was relying on medicaid to keep my fake leg working. The threats forced my work over what I could do and pushed me into homelessness for a time.
I tried calling the collectors with the last of my money and all they could do is tell me to pay $14,000 in student loans in 3 monthes. Despite their threats causing me $100k in medical bills, multiple suicide attempts, and lost work time.
Since I have stabalized financially and I have been talking to them more, you soon realize the system was made to rape you from the beginning. It's a lot easier to face when you realize you aren't necessarily the evil one.
You can ask specific questions, but the department of education will refuse to give any specifics. The best I had gotten was a letter that read, "We have investigated your claims [what was investigated specifically was not stated], and we have found no issues. We have no departments that can handle this matter and if you would like to pursuie this it will have to be through litigation."
This is the US of A. I'll hang myself at a college before
I'm threatened into [work I can't do] -> [homelessness]. I'll do my best, but when the interest is $700 a month, you know the company you were working with had no serious intension of helping to pay back any dept, but only to cause you new ones.
Children are simultaneously the most expensive and least liquid luxury you can get. If it's hard to make ends meet, maybe you should have gotten something more sensible and resalable, like a boat.
"Because Science" is one step from "Because old book". Try "Because of my experiment testing my falsifiable assertion".
I remember I posted a few weeks back that you should never own a credit card. I got modded troll and flamed pretty heavily.
And that's the problem with the publics modern perception of credit. Because I do not have a credit card and suggest that you shouldn't either, I'm considered a quack. I buy just as much useless garbage as anyone that modded me down does. I go on vacations, I order things online, I buy soda at the gas station. The only difference is I don't pay a 7% to 30% fee to do all of those things. And that is exactly what a credit card does. It doesn't help your credit. That's a lie driven by marketing campaigns of credit card companies.
I ran into this a few years ago. Basically, I got a random call saying I owed about $1k. After asking for the debt verification letter to be sent, I was able to figure out that the debt in question was for some daycare provider in 2009, 3 years before receiving my first collections call. Problem was, we had moved out of that area when this supposed debt occurred, meaning it shouldn't have been charged in the first place. The daycare provider couldn't produce any documentation to support their claim, saying that it happened 3 years ago and they can't find anything. I then called the debt collection agency back and asked for the debt to be discharged as a result, but they said the daycare center claims the debt is valid and won't reverse it. I then opened a ticket with TransUnion (where the collections was listed) and explained the situation. 30 days later I got a letter saying the looked into the debt and determined that it is valid, despite having no documentation to back the debt up, and my documentation showing I wasn't even living in that area. Best part is, I followed up with TansUnion to find out how they validated the debt, and was told they called the daycare center and simply asked them if it was valid; no proof or documentation or anything provided. The whole system is a racket, and there's basically no way to get collections reversed unless the debt involves identity theft. The original creditor has no interest in the truth because they already sold the debt. The collection agency has no interest in the truth because they have already bought the debt. The credit industry has no interest in the truth because it's their core business. The only reason this whole thing hasn't bothered me too much is because since I basically went 4 years before realizing the debt existed, I can just wait for it to fall off my report.
Yes, since the bills would be covered by insurance.
After the deductibles and co-pays. I have a "platinum" plan through my employer; better insurance than anyone else I know and the co-pays still total up to a considerable amount. No deductibles for in-network on my plan, which makes me extremely fortunate. As a single guy I can afford the co-pays even with my modest salary but I can see how quickly they would bankrupt someone with a family, particularly if said family had one or more members with a chronic illness.
Incidentally, I was just exposed to rabies a few months ago:
Strike One: The only place to get the immunoglobulin is the ER, because it's very expensive (>$4,500) and has a short shelf-life. ER co-pay: $150
Strike Two: There's a set schedule for the vaccine, Days 0, 3, 7, and 14. You can get the vaccine from your primary, in theory, but of course my primary has a months long waiting list because we're driving PCPs out of business. Bottom line, I can't get appointments with them for Days 3 or 7, so that's two more trips to the ER. Additional co-pay total: $300
Strike Three: New York State ostensibly has a fund to pay for out of pocket expenses related to rabies exposures, but they only reimburse for the rabies vaccine and immunoglobulin. Since the ER decided to give me a tetanus shot on Day 0 NYS won't reimburse me, even though my out of pocket would have been $150 with or without this extra shot. Hooray for bureaucracy!
Totaling all this up, that stupid bat that found its way into my apartment has personally cost me $465 ($450 of ER co-pays, $15 of PCP co-pay) while my insurance company is on the hook for close to $7,000. My annual premium is about $6,000. So this one incident wiped out every penny they made on me and then some. I'm an otherwise healthy 32 year old marathon runner that ought to be subsidizing those who are less fortunate. Now imagine a family of four that were all exposed to the same scenario I was.....
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
I pay for everything cash, so I have a low credit score. How the fuck does that work?
Sure, you might be independantly wealthy and just buy everything with cash... or maybe you live day to day off the money you make turning in aluminum cans. In other words, your score is low because they can't tell you from hobo.
I paid for my car cash, I pay my rent cash, I pay the cable company cash.
I have over $30k in the bank and I have monthly paychecks.
None of which is reported to a credit scoring agency.
So I should have a much higher credit rating than someone who is constantly paying with credit cards in my opinion.
You are probably more credit worthy, and probably deserve a higher score, but you aren't playing the game to get one.
I wouldn't even mind so much, except that when renting a house they do a background check, and they expect to find a credit history, which I don't have.
So get one. Apply for a card, buy some stuff you were planning to buy anyway, pay it off... costs you NOTHING. And you get a higher score on the credit rating game, for when you need it.
I suspect most medical collections (by volume, not dollar) fall into unpaid copays, and miscoded bills that are never correctly sent to insurance.
I suspect most medical collections by dollar are catastrophic issues of some sort. Hospitalization for uninsured or underinsured.
Children are something like 80% water. Sounds pretty liquid to me.
Medical bills need to be communicated up front, not after the fact.
I once went to a US hospital, I asked how much would it cost, they wouldn't tell me. I asked will it in the range of $100, or $1000, or $10,000 still wouldn't tell me.
How is any sane person meant to go into a contract without actually knowing even an approximate price. They should say would you like Xrays with that for $X.
how can there be a meeting of minds http://en.wikipedia.org/wiki/M... to form a valid contract
By paying off a credit card every month I am not paying any fee to use my money. In this case the seller is paying the fee and I collect on the benefits. On one card I earn cash back and on the other I earn airline miles which I have used to fly all over the country with very little out of pocket for the tickets (mostly various airline fees and taxes). I don't pay one cent for the use of my credit card. I don't pay interest or fees. In my case, the sellers are paying the credit card fees, not me. I'm basically getting all of the benefits at no cost to me being paid by the companies I purchase from.
The scam is when you end up paying fees to use a credit card or when you don't pay it off and pay obscene interest rates. I could see someone doing that on a rare occasion like an emergency, but it should be paid off as soon as possible. Carrying debt for the sake of carrying debt on a credit card is stupid. I have never done this and always had a very high credit score.
All of my regular banking is through my credit union where I do not pay any fees to use my money. I don't pay ATM fees at any other credit union (and they'll reimburse me for any). The more I hear about banking through the big banks the more disgusted I am.
This post is encrypted twice with ROT-13. Documenting or attempting to crack this encryption is illegal.
Even worse, there are sometimes even deceptive statements made about how much you will have to pay, and business arrangements you enter into without even knowing that the other party exists, much less that you're getting their services.
I didn't see a doctor for ten years because I couldn't afford insurance, and when I finally got covered through a decent job and went to get my first general checkup in my adult life, there was a big sign up front saying "ALL CO-PAYS DUE AT TIME OF VISIT". I figured that meant what it said: anything I owed, that was not getting billed to my insurance, was going to be billed to me before I left. When they let me walk out without paying anything, I figured that meant I must not have had a co-pay, which made sense to me as it was just a general physical exam, and a blood draw for some basic general-health lab tests (cholesterol, blood sugar, STDs, etc).
Then I got a bill in the mail a month later. Called and complained, why am I getting billed, didn't my insurance cover this, and THEN they tell me that that bill is for the remainder that's left after what my insurance paid (IOW my copay). I argued about the sign saying all co-pays were due at time of visit and they said... I don't even remember what now, exactly, but something to the extent that that's no excuse and I have to pay the bill. Not knowing what else to do, I did.
A month later I got a different bill for the blood tests, from a different company. I called and complained that I already got a bill for that visit and paid it and even that was unexpected and what the hell is with two different companies trying to collect for the same fucking service. They explained that they are the lab that my doctor sent the blood off to for the tests, and they they bill separately, and that paying my doctor for their service doesn't get me off the hook for the lab service. I had no knowledge that I was even buying services from this lab company: the only entity I interfaced with was my doctor, they hired the fucking lab, let them pay the lab and roll the cost into their bill, I figured. But no, and lab insisted I owed them money, and not knowing what to do, I paid up.
A year later, my second doctor's visit in my adult life, different doctor in a different town as I had since moved. They at least had the decency to say up front how their billing works (without me even asking), and that they will send me a bill for the copay after they process it through my insurance. And they don't do in-house blood draws and send out to a lab, they send you to the lab of your choice with orders for what tests to run. So that's better, much more clear. But the lab itself also has a "ALL CO-PAYS DUE AT TIME OF SERVICES" sign... and this time, they actually billed me at time of services! Awesome. So far, I was liking the medical establishments in this new town a lot better.
Until a month or two later I got a bill from the lab. When I called to complain that I already paid them at the time of services as their sign said, they told me then that that was only an estimated copay, and that after they put the bill through insurance, there was still a balance remaining on my copay, which is what that bill was for. Again, no idea on what grounds to dispute it, so I paid up... but ugh, what the hell
For emergency services where the patient may not have the time or awareness to evaluate the costs and benefits, I can understand you just do the service and bill later. But for a motherfucking general checkup and routine bloodwork? Jesus fucking christ, how can you not just say what it will cost up front and bill before I accept your services?
It's only one step removed from the homeless guy who washes your windows without your consent and then demands you owe him money. "Hey man you need some medical services?" "Yeah uh I guess how much?" "Can't tell you yet now turn your head and cough." "Uh... [cough]" "Aight you cool man, that'll be $100." "WTF no you didn't say it would be that much" "Too late you got the work now you pay the bill man... don't make me go get my collections posse to shake down yo ass, pay up sucka."
-Forrest Cameranesi, Geek of all Trades
"I am Sam. Sam I am. I do not like trolls, flames, or spam."